Updated on 21st January 2023
Retiring at 45 years old is an ambitious goal achievable with careful planning and the right mindset. We will need to understand the steps we need to do to achieve this goal.
Increase your Income
If your boss owns all of your time, the answer is to make more money. How? How to make more money? Add more new skills to your skill stack. If you are not making the money you want, it means you are missing certain skills. The internet is your ultimate tome of knowledge, you can learn anything. Look at Linkedin learning, you can pick up skills. Look at Udemy, you can choose any course. Learn skills like coding, social media, content marketing, newsletter, and artificial intelligence uses. Layer your skills and you are moving away from the red ocean (employment) to the blue ocean.
Establish Savings Goal
Before you can begin planning for early retirement, you need to know how much you will need to save in order to retire comfortably. One way to do this is to use a retirement calculator to estimate your expenses and determine how much you will need to save each month. Your expenses depend on a variety of factors, including your expected lifestyle and the cost of living in your area. However, a general rule of thumb is to aim to have enough saved to cover your expenses for at least 25-30 years in retirement.
Develop Savings Plan
Once you know how much you need to save, you can develop a savings plan that will help you reach your goal. This may include increasing your income, reducing your expenses, and automating your savings so that you are regularly putting money into a retirement account.
To retire early, you will need to make your money work harder for you. After you have a higher income and lower expenses, you got extra money to work for you. You need to invest the money to buy assets that build wealth. The mix of assets depends on your age, net worth, and risk appetite. One way to do this is to invest aggressively in stocks, real estate, or other high-growth assets that have the potential to generate higher returns than more traditional investments like bonds.
Minimize Debt and Live Frugally
People make $100k a month but live paycheck to paycheck. It is how much you keep that’s the definition of wealth. Carrying high levels of debt can make it difficult to save enough money to retire early. Try to minimize your debt as much as possible, and live frugally so that you can save more money. You don’t need an expensive car, you can live with a second-hand Toyota. You don’t need to have all the subscriptions, you can cancel them.
Consider Alternative Income Streams
It’s great to have a diverse income since it can help cushion any potential loss of income from one source. By having multiple streams of income, you may be able to save enough money to retire early, even if your primary income is not as high as you would like.
Seek Professional Advice
Finally, it is always a good idea to consult a financial advisor or planner for advice on retirement planning, investing, and estate planning. They will have a better knowledge of your particular situation and can give you more specific recommendations for achieving your goal of retiring early. They can help you create a more detailed plan that takes into account your individual circumstances.
In any case, the earlier you start saving and investing the more time you have for your money to grow and the more likely you are to reach your retirement goals.